Answer to Question #127733 in Microeconomics for Rana Abdul Rafay

Question

To what extent is the Marginal utility theory effective in explaining the consumer's demand curve?

Answer 1

Total utility-This is the satisfaction from a certain level of consumption.

Marginal utility-When there is change in satisfaction from consuming an extra unit from the normal.

When the marginal utility falls means that the consumer is getting less satisfaction from each product consumed.A rational consumer is not willing to spend more money for later units thus there will be less spending.Thus conventional demand curve for a normal good thus the relationship is inverse between price charged and quantity demanded.